Labor’s plan to double the tax rate on earnings for superannuation balances above $3 million has been embraced by at least half of Australian voters, according to two recent polls.
While the changes have received a mixed reaction from super funds, industry bodies, and other groups, Newspoll found that 64 per cent of voters surveyed between 1 March and 4 March were in support, while 29 per cent were against, and the remaining 7 per cent were unsure.
Seventy per cent of voters aged under 50 expressed their support for the super tax changes, compared to 60 per cent of those aged over 60. Newspoll also determined that a majority of both Labor (80 per cent) and Coalition voters (54 per cent) had approved the changes.
Support was slightly less clear-cut in the latest Guardian Essential poll, which found that half of voters endorsed the new policy, 19 per cent were against, and 31 per cent were on the fence.
According to the survey, higher support was seen across those with higher balances, including 55 per cent of respondents with between $100,000 and $199,000, 58 per cent of those with between $200,000 and $499,000, and 53 per cent with balances of $500,000 or more.
Over the past week, Treasurer Jim Chalmers has gone to great lengths to make clear that the proposed changes will affect less than 0.5 per cent of the population, applying to approximately 80,000 people.
“This modest adjustment is consistent with the government’s proposed objective of superannuation, to deliver income for a dignified retirement in an equitable and sustainable way,” the Treasurer said in a statement last week.
But on Monday, Finance Minister Katy Gallagher revealed that 10 per cent of Australians are expected to be affected in 30 years’ time, according to modelling undertaken by Treasury.
The government has faced some criticism for its decision to not index the $3 million threshold, including from the Financial Services Council (FSC), which has estimated that 500,000 Australian taxpayers will breach this level in their lifetime.
“Leaving the cap stuck at $3 million will mean that in today’s dollars, a 30-year-old will have a real cap of around $1 million, calling into question the intergenerational fairness of an unindexed cap,” FSC chief executive Blake Briggs said recently.
Super Consumers Australia director Xavier O’Halloran told InvestorDaily that the tax reforms need to be viewed in the context of the fairness of the overall system.
“The Retirement Income Review found that a person in the top 10 per cent by income percentile were receiving more in government support via earnings tax concessions than a person on the full age pension,” he said.
“This raises legitimate questions whether the system [is] providing targeted support to those who actually need it. Wherever the tax threshold or any other measures land need to be guided by what is equitable.”
With the government staring down a projected structural budget deficit of $50 billion for 2025–26, one expert believes that the government could be testing the waters for further tax tweaks with its super tax changes.
